The Government has taken several measures to effectively control and curb the prevalence of parallel economy and unaccounted transactions. Major steps in this regard constitute:-  

1.  Enactment of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 w.e.f. 01/07/2015 to more effectively tackle the cases involving black money stashed abroad.

2.  Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 w.e.f. 01/11/2016 to effectively deal with domestic black money cases.

3.   Constitution of the Special Investigation Team (SIT) on Black Money in May, 2014 under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court. The SIT has so far submitted 6 reports to Hon’ble Supreme Court

4.  Constitution of Multi-Agency Group (MAG) for coordinated and effective investigation in ‘Panama paper leaks’ cases and Paradise Leaks cases.

5.  Task Force (TF) on Shell Companies constituted under the joint chairmanship of Revenue Secretary and Secretary (Ministry of Corporate Affairs) in February, 2017. The task force has met 6 times so far.

6.  Various other anti-evasive legislative measures taken:

6.1    Tracking & curbing cash transactions and strengthening third party reporting mechanism: Quoting of PAN made mandatory for sale or purchase of any goods/services above ₹ 2 Lakh.

6.2    Post-demonetization, significant measures: 

(i)  Quoting of PAN made mandatory for all cash deposits above ₹ 50,000 and aggregating to more than ₹ 2.5 lakh for the period from 9 November to 31 December, 2016.

(ii) Further, Rule 114E of the Income Tax Rules, 1962 was amended to mandate the prescribed reporting entities to report all cash deposits above ₹ 2.5 Lakhs in savings accounts and ₹ 12.5 Lakhs in current account during the above period.

(iii) Restriction on cash transaction of ₹ 2 lakh or more (Section 269ST of I.T. Act), no deduction under section 80G if cash donation exceeds ₹ 2000 w.e.f. 01.04.2018, restriction on donations of ₹ 2000/- or more to political parties otherwise than by a bank account or through electoral bonds.

(iv) Deeming fair market value as full value of consideration for computation of capital gains in case of transfer of shares other than quoted shares.

(v)   Mandating that a person who has an account (other than a time deposit and a Basic Saving Bank Deposit Account) maintained with a banking company or a cooperative bank shall furnish his PAN or Form No. 60 etc.

(vi)  Linking of Aadhar with PAN has been made mandatory for filing Income Tax Returns and for applying for new PAN from 1st July 2017.

 7.      International Cooperation: 

(i) Proactively engaging with foreign governments to enhance the exchange of information (EoI) under tax treaties, India has tax treaties with 148 foreign jurisdictions as on 30.06.2017

(ii)   India joined a group of 48 countries as early adopters to new global standards for automatically exchanging information from 2017

(iii) India-Mauritius and India-Singapore tax treaties amended to adopt source based taxation of capital gains with a view to help curb tax evasion and tax avoidance. 

8. Interventions in regulatory framework by the CBDT:  

8.1 Integration of PAN and TAN with MCA Portal:

e-PAN Card for Company Applicants issued within 1 day (95% within 4 hrs) from March, 2017

8.2 MoU for exchange of information signed between Central Board of Direct Taxes and Ministry of Corporate Affairs. 

9.      Actions in the context of demonetization: The Income-tax Department adopted a multi-pronged approach to detect and seize undisclosed assets after the announcement of the demonetization scheme on 8 November, 2016. This included collection of high quality intelligence, identification and prioritization of high risk cases, creating deterrence while ensuring professionalism and integrity in investigations. Significant steps taken in this regard are:- 

9.1       Enforcement actions: 

i.  The Income Tax Department conducted searches in 900 groups during November 2016 to March, 2017 leading to seizure of assets of ₹ 900 crore, including cash of ₹ 636 crore, and admission of undisclosed income of ₹ 7,961 crores

ii.  During the same period, 8,239 surveys were conducted leading to detection of undisclosed income of ₹ 6,745 crore 

9.2.      Operation Clean Money initiated by the Income Tax Department on 31st January 2017: 

i.   17.73 lakhs suspicious cases (No. of PANs) identified involving ₹ 3.68 lakh crore in 23.22 lakh bank accounts

ii. Responses of 11.18 lakh persons for 16.92 lakh bank accounts taken online

iii.  Further, a total of 20,572 Income Tax Returns (ITRs) have been selected for scrutiny under Computer Assisted Scrutiny System (CASS) - 2017 in Cycle-2. Moreover, 1,16,262 notices under section 142(1) of the Income Tax Act are being issued to non-filers who deposited ₹ 25 lakh or more in cash during demonetization but failed to file their return of income by the due date.

9.3.  Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY)

i.   The Taxation Laws (Second Amendment) Act, 2016 was enacted, which enabled levy of tax at a higher rate on the undisclosed income under which a person could declare his undisclosed cash by paying tax, surcharge & penalty totaling to 50% of the undisclosed income. Besides, he would have to keep 25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme, interest free for 4 years.

ii. 21000 persons disclosed ₹ 4,900 crore under the Prime Minister Garib Kalyan Yojana (PMGKY) on which ₹ 2,451 crore was collected as tax.

10.   The Income Declaration Scheme, 2016: 71,726 declarations declaring undisclosed income of ₹ 67,382 crore were made under the scheme

This information was shared by Union Minister of Finance and Corporate Affairs Shri Arun Jaitley in Lok Sabha.

Anti-black money legislation and reporting mandates strengthen disclosure, third-party reporting, and international information exchange to curb unaccounted transactions. The Government adopted a multifaceted program combining specific legislation against undisclosed foreign assets and benami transactions, stricter reporting and PAN/Aadhaar linkage requirements, and enhanced third party reporting. It established specialist investigative bodies and task forces, conducted post demonetization enforcement including searches, surveys and computer assisted scrutiny, and offered a voluntary declaration scheme. Internationally, India expanded automatic information exchange and amended bilateral tax treaties, while administrative integrations improved electronic PAN issuance and inter agency information sharing to strengthen detection and investigation of unaccounted transactions.